Small Superannuation Accounts Act 1995

The following is a simplified explanation of this Act:

• The Australian Taxation Office administers a special account. Notional accounts are kept within the special account.

• The account offers employees with small balances an opportunity to avoid the erosion of those balances by fees.

• Employees may request that account balances be transferred to a nominated superannuation fund or RSA.

• Except in special cases, employees will not have direct access to their account balances.

• Interest will be calculated on the daily balance of the account and credited to the account on a quarterly basis.

• Interest is exempt from income tax.

• If an account balance exceeds $1,200, interest will only be credited on the first $1,200 of the balance. This is an incentive for employees to request that balances of more than $1,200 be transferred to a superannuation fund.

• Under the Income Tax Assessment Act 1936, employers may get income tax deductions for deposits. There is an annual deduction limit of $1,200 per employee.

• Under the Superannuation Guarantee (Administration) Act 1992, deposits made by an employer will be treated as superannuation contributions.

• The accounts may also be credited with Government co‑contributions payable under the Superannuation (Government Co‑contribution for Low Income Earners) Act 2003. The rules for these deposits differ in some respects from those that apply to other deposits.